The French Companies and Their Stock Market Performance at the Launch of Corporate Acquisition Programs

Omar Boufama

doi:doi:10.11648/j.jfa.20160404.11

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The French Companies and Their Stock Market Performance at the Launch of Corporate Acquisition Programs

Omar Boufama

Published in Journal of Finance and Accounting (Volume 4, Issue 4)

Received: 23 March 2016 Accepted: 11 May 2016 Published: 7 June 2016

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Abstract

This paper presents an econometric analysis of the profitability generated at the initiation of the corporates acquisition programs by French investors. These programs generally launched by the firms directors, need to have a high frequency of acquisition attempts, in order to cover fixed costs of the program and generate profits, which they increase the value of the firm and enrich the shareholders. Our empirical study applied on a sample of French companies of various economics branches gives a controversial result. Indeed, the sample of study made up of 46 firms of any size over a period of 11 years from 1997 to 2007, shows that only the hypothesis of the announcement effect was been verified. In the sub-sample of the studied companies, the acquisition programs of two “SMEs” namely Guerbet and Sartorius had a positive value, what proves their financial performance. These results show that the corporate acquisition programs are projects of value-creating investment for French small and medium enterprises. However, generally, for the sample of study, the French companies considered as frequent bidders on French acquisition market indicate clearly that firm’s acquisition programs during the study period were destructive of value. It means they do not maximize the value of the firm nor the stockholder’s wealth.

Published in	Journal of Finance and Accounting (Volume 4, Issue 4)
DOI	10.11648/j.jfa.20160404.11
Page(s)	157-163
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2016. Published by Science Publishing Group

Keywords

Acquisition Program, Announcement Effect, Economic Impact, Abnormal Return, Profitability, Acquisition Attempts

References

[1]	Aktas, N., De Bodt, E., Roll, R., 2013. Learning from repetitive acquisitions: Evidence from the time between deals. Journal of Financial Economics 108, 99-117.
[2]	Aktas, N., De Bodt, E., Roll, R., 2009. Learning, hubris and corporate serial acquisitions. Journal of Corporate Finance 15, 543-561.
[3]	Arvanitis, S., Stucki, T., 2014. Do mergers and acquisitions among small and medium-sized enterprises affect the performance of acquiring firms? International Small Business Journal, January, 1-34.
[4]	Asquith, P., Bruner, R., Mullins, D., 1983. The gains to bidding firms from merger. Journal of Financial Economics 11, 121-139.
[5]	Boufama, O., 2015. Corporate acquisition programs: Towards a model of evaluation of the profitability, try of adaptation to Algeria. Ph.D. Thesis, Badji Mokhtar University, Annaba, ALGERIA.
[6]	Bouzgarrou, H., Navatte, P., 2012. Short Term Wealth Creation Sustainability of French Acquirers of Unlisted Versus Listed Firms. Bankers, Markets & Investors N° 121, November-December, 47-58.
[7]	Jensen, M. C., Ruback, R. S., 1983. The market for corporate control: The scientific evidence. Journal of Financial Economics 11, 5-50.
[8]	Malatesta, P., Thompson, R., 1985. Partially anticipated events: a model of stock price reactions with an application to acquisitions. Journal of Financial Economics 14, 237-250.
[9]	Malatesta, P., 1983. The wealth effect of merger activity and the objective functions of merging firms. Journal of Financial Economics 11, 155-181.
[10]	Schipper, K., Thompson, R., 1983. Evidence on the capitalized value of merger activity for acquiring firms. Journal of Financial Economics 11, 85-119.
[11]	Song, M., Walkling, R., 2000. Abnormal returns to rivals of acquisition targets: A test of the ‘acquisition probability hypotheses’ Journal of Financial Economics 55, 143-171.
[12]	Weston, F., Copeland, T., 1992. Managerial Finance. Ninth Edition. The Dryden Press International Edition.
[13]	Web site of “Autorité des Marchés Financiers”: www.amf-france.org

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APA Style

Omar Boufama. (2016). The French Companies and Their Stock Market Performance at the Launch of Corporate Acquisition Programs. Journal of Finance and Accounting, 4(4), 157-163. https://doi.org/10.11648/j.jfa.20160404.11

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ACS Style

Omar Boufama. The French Companies and Their Stock Market Performance at the Launch of Corporate Acquisition Programs. J. Finance Account. 2016, 4(4), 157-163. doi: 10.11648/j.jfa.20160404.11

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AMA Style

Omar Boufama. The French Companies and Their Stock Market Performance at the Launch of Corporate Acquisition Programs. J Finance Account. 2016;4(4):157-163. doi: 10.11648/j.jfa.20160404.11

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@article{10.11648/j.jfa.20160404.11,
  author = {Omar Boufama},
  title = {The French Companies and Their Stock Market Performance at the Launch of Corporate Acquisition Programs},
  journal = {Journal of Finance and Accounting},
  volume = {4},
  number = {4},
  pages = {157-163},
  doi = {10.11648/j.jfa.20160404.11},
  url = {https://doi.org/10.11648/j.jfa.20160404.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20160404.11},
  abstract = {This paper presents an econometric analysis of the profitability generated at the initiation of the corporates acquisition programs by French investors. These programs generally launched by the firms directors, need to have a high frequency of acquisition attempts, in order to cover fixed costs of the program and generate profits, which they increase the value of the firm and enrich the shareholders. Our empirical study applied on a sample of French companies of various economics branches gives a controversial result. Indeed, the sample of study made up of 46 firms of any size over a period of 11 years from 1997 to 2007, shows that only the hypothesis of the announcement effect was been verified. In the sub-sample of the studied companies, the acquisition programs of two “SMEs” namely Guerbet and Sartorius had a positive value, what proves their financial performance. These results show that the corporate acquisition programs are projects of value-creating investment for French small and medium enterprises. However, generally, for the sample of study, the French companies considered as frequent bidders on French acquisition market indicate clearly that firm’s acquisition programs during the study period were destructive of value. It means they do not maximize the value of the firm nor the stockholder’s wealth.},
 year = {2016}
}

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TY  - JOUR
T1  - The French Companies and Their Stock Market Performance at the Launch of Corporate Acquisition Programs
AU  - Omar Boufama
Y1  - 2016/06/07
PY  - 2016
N1  - https://doi.org/10.11648/j.jfa.20160404.11
DO  - 10.11648/j.jfa.20160404.11
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JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
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EP  - 163
PB  - Science Publishing Group
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UR  - https://doi.org/10.11648/j.jfa.20160404.11
AB  - This paper presents an econometric analysis of the profitability generated at the initiation of the corporates acquisition programs by French investors. These programs generally launched by the firms directors, need to have a high frequency of acquisition attempts, in order to cover fixed costs of the program and generate profits, which they increase the value of the firm and enrich the shareholders. Our empirical study applied on a sample of French companies of various economics branches gives a controversial result. Indeed, the sample of study made up of 46 firms of any size over a period of 11 years from 1997 to 2007, shows that only the hypothesis of the announcement effect was been verified. In the sub-sample of the studied companies, the acquisition programs of two “SMEs” namely Guerbet and Sartorius had a positive value, what proves their financial performance. These results show that the corporate acquisition programs are projects of value-creating investment for French small and medium enterprises. However, generally, for the sample of study, the French companies considered as frequent bidders on French acquisition market indicate clearly that firm’s acquisition programs during the study period were destructive of value. It means they do not maximize the value of the firm nor the stockholder’s wealth.
VL  - 4
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ER  -

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Author Information

Omar Boufama

Faculty of Economic and Management Sciences, 20 August 1955 University, Skikda, Algeria

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APA Style

Omar Boufama. (2016). The French Companies and Their Stock Market Performance at the Launch of Corporate Acquisition Programs. Journal of Finance and Accounting, 4(4), 157-163. https://doi.org/10.11648/j.jfa.20160404.11

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ACS Style

Omar Boufama. The French Companies and Their Stock Market Performance at the Launch of Corporate Acquisition Programs. J. Finance Account. 2016, 4(4), 157-163. doi: 10.11648/j.jfa.20160404.11

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AMA Style

Omar Boufama. The French Companies and Their Stock Market Performance at the Launch of Corporate Acquisition Programs. J Finance Account. 2016;4(4):157-163. doi: 10.11648/j.jfa.20160404.11

Copy | Download

@article{10.11648/j.jfa.20160404.11,
  author = {Omar Boufama},
  title = {The French Companies and Their Stock Market Performance at the Launch of Corporate Acquisition Programs},
  journal = {Journal of Finance and Accounting},
  volume = {4},
  number = {4},
  pages = {157-163},
  doi = {10.11648/j.jfa.20160404.11},
  url = {https://doi.org/10.11648/j.jfa.20160404.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20160404.11},
  abstract = {This paper presents an econometric analysis of the profitability generated at the initiation of the corporates acquisition programs by French investors. These programs generally launched by the firms directors, need to have a high frequency of acquisition attempts, in order to cover fixed costs of the program and generate profits, which they increase the value of the firm and enrich the shareholders. Our empirical study applied on a sample of French companies of various economics branches gives a controversial result. Indeed, the sample of study made up of 46 firms of any size over a period of 11 years from 1997 to 2007, shows that only the hypothesis of the announcement effect was been verified. In the sub-sample of the studied companies, the acquisition programs of two “SMEs” namely Guerbet and Sartorius had a positive value, what proves their financial performance. These results show that the corporate acquisition programs are projects of value-creating investment for French small and medium enterprises. However, generally, for the sample of study, the French companies considered as frequent bidders on French acquisition market indicate clearly that firm’s acquisition programs during the study period were destructive of value. It means they do not maximize the value of the firm nor the stockholder’s wealth.},
 year = {2016}
}

Copy | Download

TY  - JOUR
T1  - The French Companies and Their Stock Market Performance at the Launch of Corporate Acquisition Programs
AU  - Omar Boufama
Y1  - 2016/06/07
PY  - 2016
N1  - https://doi.org/10.11648/j.jfa.20160404.11
DO  - 10.11648/j.jfa.20160404.11
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 157
EP  - 163
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20160404.11
AB  - This paper presents an econometric analysis of the profitability generated at the initiation of the corporates acquisition programs by French investors. These programs generally launched by the firms directors, need to have a high frequency of acquisition attempts, in order to cover fixed costs of the program and generate profits, which they increase the value of the firm and enrich the shareholders. Our empirical study applied on a sample of French companies of various economics branches gives a controversial result. Indeed, the sample of study made up of 46 firms of any size over a period of 11 years from 1997 to 2007, shows that only the hypothesis of the announcement effect was been verified. In the sub-sample of the studied companies, the acquisition programs of two “SMEs” namely Guerbet and Sartorius had a positive value, what proves their financial performance. These results show that the corporate acquisition programs are projects of value-creating investment for French small and medium enterprises. However, generally, for the sample of study, the French companies considered as frequent bidders on French acquisition market indicate clearly that firm’s acquisition programs during the study period were destructive of value. It means they do not maximize the value of the firm nor the stockholder’s wealth.
VL  - 4
IS  - 4
ER  -

Copy | Download